Manual data reconciliation processes are costing firms serious money while increasing their business risk and reducing compliance with regulation
Financial services organisations are still relying too much on manual data reconciliation, resulting in huge costs, business risk, and non-compliance with industry regulation, a new report from data company Duco finds today.
Nearly one in five (17%) financial services organisations rely entirely on manual processes for data reconciliation, while nearly one in three (30%) use a hybrid approach of manual processes and specific automated point systems for certain types of data.
Nearly half (44%) believe that the reason for this overreliance is because of the different types of data the organisation has to deal with, which makes reconciling data without manual processes difficult.
These are the findings from Duco’s latest research into the state of reconciliation within large financial services organisations. The report uncovers more detail on manual data reconciliation overreliance, while also outlining how the industry sees the drivers and barriers towards data automation.
Christian Nentwich, CEO, Duco said: “We completely understand why firms use manual processes for data reconciliation. The volume, velocity and variety of data makes it complex to manage and seemingly the only way to do it is manually. And everybody understands how to use Microsoft Excel.
“At the same time, financial services firms need to remain vigilant around the impact of such manual processes. First, they cost the earth, with some companies needing armies of people to reconcile data. Secondly, they’re prone to errors. One of Duco’s clients recently had a spreadsheet with an incorrect calculation that was costing them close to $3 million every year. These errors do not just hit the bottom line, they also undermine risk mitigation and regulatory compliance efforts.”
According to the International Data Corporation these issues are only going to get worse as worldwide data is set to climb by a compound annual growth rate of 23% until 2025 — with enterprises, for the first time, being the primary driver of that growth.
Nentwich continued: “Reconciliation all boils down to money and risk. Until recently, firms have seen manual processes as a necessary evil, but it’s clearly not sustainable.”
Financial services organisations are, however, investigating ways to reduce their reliance on manual processes — the catalyst for change (in part) being the pandemic. 40% say Covid-19 has increased their interest in machine learning for data automation, while 42% of firms say they will investigate the use of more machine learning in 2021 for the purposes of data automation.